In the Blockchain Game, Reaction Time is a Fundamental Competitive Advantage

In a Blockchain world, the ‘first mover’ matters as there is no time to be second.

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If you are a CEO you need to assess whether Blockchain is an opportunity and/or a threat. But then getting their attention is hard enough. Quite often during conversations I ask CEOs the following question that generally gets their attention:

“Imagine if a competitor arrives into your market with a 50 percent price advantage, how would you respond?”

…and watch their faces.

Some then ask, making the assumption that they are starting to feel uncomfortable that there may be something to this new technology, how long do I have?

To which my response is always the same:

“Mars base has just called and informed me the alien fleet has left on their way to Earth, and by the time they reach the Moon there will be not time to react.”

Blockchain will mature by 2020

Blockchain is not just a new technology, a network, a development environment, a currency and distributed ledger. It represents a fundamental structural change to commerce, to how conventional operating models work.

The nature of work itself hasn’t really changed since the Henry Ford days of mass manufacturing and long production runs. Organizational and management behaviours has not advanced much for more than 150 years.

The culprit of course is the System of Record that was underpinned by the arrival of SQL databases in the 1970’s and ERP in the 1980’s. Technology that hard wired inefficiencies creating the industry layers and duplication of effort we see today, where everyone has a copy of the information on their database that the other parties don’t trust.

Theatre of AML and KYC

Why? Because the entire system of commerce we have today is based on a system of debt which is why we have to endure the excruciating façade that is the theatre of Anti Money Laundering (AML) and Know Your Customer (KYC) compliance checking each and every time.

Armies of people checking and rechecking, reconciling and validating. Adding frictional cost of at least 25 percent to an already inefficient operating model. All because nobody trusts the other party’s data requiring a central body - bank - to be the final validator, arbiter of their version of the truth.

With a Blockchain Operating Model all this nonsense goes, there is no need for the theatrical performances, as the Blockchain is an open distributed ledger where everything is transparent, where the network validates transactions, where trust is delivered because there is no trust, where the identities of the good and bad actors are known and transactions are guaranteed that don’t require any form of reconciliation or audit.

Competitive weapon

If you are a CEO, you and your organization need a plan for Blockchain just in case a competitor arrives when you least expect it, when you don’t have enough time to react, when your customers move, leaving you managing an empty shell.

Better to be on the front foot embracing Blockchain and using it as a competitive weapon to gain the advantage – as in a Blockchain world the ‘first mover’ matters as there is no time to be second…

As Peter Thiel famously said:

“The objective is not to compete but to destroy the competition and monopolize a market.”

This time things will happen quicker. It will be brutal and if you are a ‘middleman’ in an industry starting to talk and embrace Blockchain you will soon be toast…